New Inland Outlook Report Says Multifamily and Self-Storage May Benefit in 2025

Real estate investment manager Inland Real Estate Investment Corporation, a member of The Inland Real Estate Group of Companies Inc., recently published its 2025 Commercial Real Estate Outlook. According to the report, the American dream of homeownership may be fading – especially for millennials and those living in major metropolitan areas – but this could potentially benefit both traditional multifamily and self-storage real estate.
With current housing prices and interest rates at historic highs, traditional homeownership is out of reach for many potential buyers. In fact, the report states that renting is more affordable than owning in all 50 major metro markets, with the typical mortgage payment exceeding rents by 37% – even before factoring in taxes, insurance, and maintenance. Additionally, with many homeowners locked into mortgage rates in the 3% to 4% range, selling may not be an attractive option. These factors, plus a lag in multifamily construction, are expected to continue to drive the multifamily and rental housing market in 2025.
Average Monthly Multifamily Rent Vs. New Home Mortgage Payment Forecast
The report states that the build-to-rent subsector could especially benefit, as it serves multiple major demographic sectors. Millennials, who are priced out of traditional homeownership, will need to rent. Their preferences, however, are shifting from urban and downtown locations near nightlife and offices to suburban areas with more space for a family and working from home. Meanwhile, baby boomers are looking to downsize and shed maintenance responsibilities while maintaining flexibility to move or travel. These individuals are also anticipated to find build-to-rent options appealing.
Manufactured housing communities may also benefit given their status as the most affordable housing option available. These types of communities are in short supply and fill a very important need in the affordable housing space, again providing essential housing to those priced out of the housing market or looking to downsize.
With the significant shift in housing needs, the report says that self-storage may also have the potential for significant rent growth in 2025. The sector boomed during the pandemic but then underperformed as the pandemic ended and interest rates spiked. As self-storage rents have now given back nearly all of the pandemic-era gains, Inland states that the sector is now poised to form a base and benefit from the stable demographic demand going forward. The stabilization of supply growth should also contribute to a potentially positive year for self-storage.
Self-Storage Annual Supply Growth
Inland itself has recently delivered self-storage properties in Louisiana and Florida, as well as taken over the management of properties in Houston and Lubbock, Texas.
Inland states that a renter receives a new or like-new product with no additional cash flow needed for taxes, insurance, or maintenance, while also often receiving amenities like a pool and fitness center. Renters also do not need to come up with a downpayment required for traditional homeownership.
Given this backdrop, the report expects that strong demand will remain for multifamily and rental housing in 2025. Even with the possibility for declining interest rates, much of the potential benefit will likely be offset by increasing home prices, as a lower interest rate will bring yet more buyers into the market, driving up prices given the market’s supply constraints.
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